Air Pollution In Mid-20Th Century United States: Effects On Infant Mortality And Property Values

Abstract

This paper studies the local impact of air pollution on infant mortality and housing prices. The empirical analysis relies on the historical expansion in fossil fuel electricity generation from 1938 to 1962, the leading source of domestic coal consumption by the mid-20th century. Combining newly digitized information on plant-level coal consumption with county-level air quality measures and infant mortality rates, we find that increases in coal consumption are associated with higher concentrations of total suspended particulates (TSPs) and increases in infant mortality. Our estimates suggest that the rise in power plant emissions was re- sponsible for an additional 9,486 infant deaths over the sample period. We examine whether these health costs were capitalizated into housing values. Although estimates of the average marginal willingness to pay for clean air are close to zero, there appears to be significant heterogeneity in the housing market response. At low levels of baseline electricity access, thermal power plants are considered an amenity by local residents. As access to electricity expands, the pollution costs overwhelm the benefits of energy production, and the rela- tionship between thermal emissions and housing prices reverses. These results highlight a challenge for current energy policy in the developing world: Given the longevity of electric- ity generation infrastructure, policymakers must take into account both current and future preferences for thermal power when making investment decisions.